Trust the people on the economic consequences of the virus

Richard Fuller MP
Richard Fuller MP

Every five minutes, armchair experts are offering their ideas on how to end the lockdown but I think the government first needs to help build a consensus on the why for ending the lockdown.

The answer to “why?” is urgently apparent for many across North East Bedfordshire, amongst them many freelancers, self-employed and owner directors who do not qualify for support or who see their businesses weakening by the day.

Many others, though, shielded from the economic costs by the extraordinary government support measures may have different views on rushing to a transition.

A clear explanation of the costs of the lockdown, the scale and pace of increase, for the economy and for lives lost as a consequence of the lockdown will help build a consensus and prepare the path for transition.

I have now called on the Treasury to publish its economic assessment of the lockdown and for the government to provide greater transparency on the costs to the country in terms of jobs and businesses that will be lost.

The lockdown, and the efforts of our health and care workers have achieved the goal of protecting the NHS. Now, the best way to repay our debt to those workers, quite literally repay, is to get the economy growing again.

We can’t go on like this

Currently, thanks to massive government support, large parts of the economy are in suspended animation: but we can’t go on like this.

At the moment, some people are ignoring or discounting what will happen to their jobs, their incomes and their businesses when that support is withdrawn.

Be in no doubt – the impact of the withdrawal of government support will be profound. We must have a frank national conversation about what will happen. We should start that conversation today.

There are two Britains today. In one, many employees are inactive but paid. Companies are getting cash grants, loans and deferred expenses.

Things seem fine, in this false reality; but in the other Britain, which senses the life to come, we see chilling forecasts on almost every economic indicator going unheeded.

Companies are temporarily being held up by exceptional government programmes. This period is an unsustainable pause of market principles which has already cost the UK taxpayer over £260bn [1], equivalent to about 6 years funding for defence, and which provides no guarantee that as the lockdown ends all will be well.

Despite these ever-increasing costs, the public has been given a false confidence that the economic world has not changed.

When we collectively realise it has changed, the political backlash will be severe unless we have been treated like adults, entitled to be trusted with the truth about our fate.

Forecasts are stark – the sharpest ever decline in quarterly GDP [2], consumer confidence near historic lows [3], government borrowing quadrupling for next three months [4], and forecasts of up to five million additional people unemployed [5].

A crucial decision for the Prime Minister will be how to transition our collective thoughts from one Britain to the other.

Building a public consensus for changes is a prerequisite for the launch of a transition plan. Only with that broad support can the most negative forecasts be avoided because public confidence will be stronger.

The OBR has forecast a sharp V shaped recovery, but the Prime Minister will know he cannot rely on such optimism without energising our workers, employers, entrepreneurs and investors.

Despite the best efforts of government, many jobs and many businesses will not survive this downturn. In our hearts we, the people, know this.

We know that there will be challenges and are better prepared to take them on when we are told the truth.

We are a strong nation, able to look truth in the face unflinchingly. We must be trusted to do so.

The government should be open and direct on the costs of the lockdown

Current forecasts are too distant, too removed to pierce the cocoon and jolt people out of the current fake reality.

Cold hearted or not, that public discussion needs to take place. The government should spell out now what are the optimal extraordinary measures to take next and the range of consequences of failing to take that possibly difficult, possibly challenging, next step. Sitting it out is not an option

The Prime Minister needs to level once again with the British people and explain the cost in terms of jobs and businesses and the deaths caused by the lockdown from treatments unsought, declines in mental health and future economic impacts.

Did the cabinet have an assessment of the economic costs of the lockdown to sit alongside the medical assessment when the lockdown became policy?

The Treasury should publish its economic assessment now, so people know if their jobs, their businesses are on the line.

As a staged re-opening seems most likely, the government should give dates for each sector so that, whether reopening or not, businesses can budget accurately. As employees come off furlough any confusion on dates will cost jobs.

The government should soon give a clear explanation of when and how the furlough scheme will end. Is June the last month or will there be a tapering?

If businesses know, then they can start to tell those furloughed employees that there is no job for them when the scheme ends.

That provides two months for people to prepare, budget and seek new work if necessary. To leave such people blundering in the dark, or to deceive them with false hope, is unfair.

There is a political truth to be told here too. If we do not come forward with the truth and a plan for the future that returns the market and capitalism to our way of life, our opponents will seek to prolong these temporary emergency measures and make a false economy our way of life. That way, ruin lies.

The overarching principle for government messaging now should be as equally open, equally transparent on the impact of the virus on the economy as it has been on the impact of the virus on our health.

We can handle the truth. It should be given to us.

This is a monthly guest column provided by
Richard Fuller MP and published unedited.

References: [1] IFS quoted 23rd April 2020, [2] BBC News 9th April 2020, [3] GfK Index Release 24th April 2020, [4] Financial Times 23rd April 2020, [5] NIESR Study No 252 May 2020.

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